Thursday, August 30, 2012

CDL to sell huge Kranji industrial plot for $240m

Business Times: Thu, Aug 30

CITY Developments Ltd (CDL) and an unlisted sister company in the privately held Hong Leong Group are understood to have inked a deal to sell their nearly 500,000 sq ft freehold tract of industrial land in Kranji for $240 million.

The buyers are believed to be linked to property development group BS Capital.

A market watcher said it was rare to find such a large freehold industrial site on the island.

The land, along Jalan Lam Huat, off Kranji Road, is near SMRT's Kranji depot and across a canal from Kranji Industrial Estate in the Sungei Kadut location.

The property is currently used as an open-yard storage area under a lease which is expected to run out in a year. The new owners are expected to redevelop the site - most likely into strata industrial facilities, and possibly some landed factories.

The site is zoned for Business 2, which means it can be used for a range of uses, such as light industry, general industry, warehousing, utility or telecommunications.

Based on a 2.5 plot ratio, the property can be developed into a maximum gross floor area of about 1.17 million sq ft. The $240 million price for the land reflects a unit land price of around $205 per square foot of this potential gross floor area. No development charge is thought to be payable.

CDL's 2011 annual report showed that it owns a 37.17 per cent interest in the 466,540 sq ft plot. The majority is thought to be owned by a privately held vehicle of Hong Leong Group, the parent of CDL.

The party buying the site buyer is an entity that is majority controlled by BS Capital, set up by Raymond Ng Ah Hua. Among other things, BS Capital has developed Good Class Bungalows in Bishopsgate, the 45-storey Lumiere condo on the former HMC Building site at Mistri Road off Shenton Way, and The Arc at Draycott in the plush Ardmore Park-Draycott residential belt.

Mr Ng, who is also executive chairman of Enviro-Hub Holdings, last year acquired a Good Class Bungalow at Yarwood Avenue on a sprawling 69,546 sq ft site. At $59.5 million, that was 2011's biggest GCB transaction. The price worked out to $856 psf on land area.

The Jalan Lam Huat site comprises six land parcels. CDL is understood to have purchased the property in 1989 for $19 million, but later sold the majority stake to the Hong Leong unit for about $37 million in the 1990s.

For the latest transaction of the Jalan Lam Huat site, based on CDL's 37.17 per cent interest in the property, it should be able to book sales proceeds of around $89 million when the sale is completed, probably in late-October.

Given that CDL does not revalue its assets, the group stands to book a substantial profit from selling its remaining stake in the property.

Non-core assets that CDL has divested itself of since 2010 include The Corporate Building and The Corporate Office along Robinson Road, strata units in GB Building, and Chinatown Point mall.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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